Apple’s biggest move was discounting the iPod. For the first time since April of 2003, Apple has dropped the price on its flagship iPod, with the 30-gigabyte model now costing fifty dollars less, at $250. They also cancelled the 60-gig model, replacing it with a new 80-gig iPod that still costs fifty dollars less than the old 60-gig ($350). The new iPod is also brighter and has a better battery.
This greatly affect Microsoft’s Zune strategy. Regardless of features, most consumers make a simple form factor/capacity comparison. In the full-size category, Apple has set a new bar at $250, while the Zune is rumored at $300. If Microsoft hopes to compete, it will have to drop the Zune’s price accordingly, which will cut into its profit margin.
The iPod notoriously has a giant profit margin, so Apple seems to be willing to sacrifice quite a bit of that to hold onto their massive market share. That is a ballsy move by Apple, one completely unnecessary until now, since Apple had no real competition, and indicated that they are willing to take on Microsoft with everything they’ve got. Microsoft used to fight a good fight, but we’ll have to wait and see if they’ve got what it takes to compete in this one.
Besides that, Apple introduced iTV, although a lot of its details are still unknown. The device acts similar to a Media Center Extender, streaming media over built-in wifi or ethernet from a computer to a TV. It works with both PCs and Macs, and costs $300.
Now, that’s a pretty good device, especially if you buy a ton of stuff from the iTunes TV and new Movie Store, but Microsoft already has a $300 box that does media streaming from a Windows PC: The Xbox 360. While there are advantages and disadvantages of the features of both the Apple and Microsoft solutions, including media formats, interface, speed, looks, and other things, there remain two killer features:
- The Xbox 360 is an Xbox 360, and it plays video games.
- Windows Media Center is a DVR, and records and plays back TV shows.
With both boxes costing $300, Apple made it real easy to run comparisons. Of course, iTV has built-in wifi, and probably the biggest mistake Microsoft made with the 360 was not giving it wifi. Still, iTV has yet to be released, and by the time it hits stores sometime in 2007, maybe Microsoft will either rectify that mistake, or drop the price of the 360. Historically, console prices drop every 18 months, which means a Xbox 360 Core system may cost $250 or less by May 2007, making the addition of wifi an affordable one.
As long as Microsoft is selling a next generation game console/DVR for the same price as iTV, Apple’s box will be a hard sell. Still, it has a small form factor, and, no doubt, it will “just work”. Using an Xbox 360 as a Media Center Extender under Windows Vista is not always a perfect solution, as evidenced by the hairs I have pulled out testing it these last few weeks.
However, a Media Center Extender can be bought for $230. They include wifi, and “just work”, too. As long as Apple does not include a DVR with its operating system, its Front Row application and devices like iTV will not have even the moderate success Media Center has. iTV seems like a nice peripheral, but there simply isn’t enough features in there. Microsoft can claim that for the same $300, you get an Xbox which does all that iTV does plus games and DVR, and for seventy dollars less, you can stream Media Center, which does all that iTV does plus DVR.
Of course, Apple always gets the better shake from the press, so watch the media act like this has never been done before. They certainly did with Front Row.
As an aside: doesn’t the new iTunes album art remind you of the same exact view in Windows Media Player 11? Eh, whatever.